It’s about bloody time.
Shareholders of major public companies, I understand,
are finally questioning, and protesting, the excessive pay packages of their
I write as a resolute defender of reward for high
commercial achievement. But clearly
executive compensation has become completely detached from executive
performance. It has become detached
For months I’ve been wondering with growing
incredulity why shareholders have been so quiet on the subject, especially
those who own stakes in firms that have signally failed, quarter after dismal quarter,
year after disappointing year, to deliver decent results.
The banks of course are foremost among the floundering
enterprises determined beyond rationality to cling to their failing bosses. The shares of most have been flirting for a
decade with their all-time lows – depressed by consistently poor earnings,
blatantly terrible lending policies, willfully irresponsible management and, in
many cases, absurdly expensive acquisitions.
Senior managers carried on regardless, gorging greedily on inflated
salaries and fantastic bonuses, blind to their own shortcomings, or shamelessly
denying of them, in either event secure in the knowledge that shareholders
would be equally myopic or complacent than they were.
The banks aren’t alone. The shareholders of Trinity Mirror Newspapers
have forced their chief executive, Sly Bailey, out of her job. Ms. Bailey last year enjoyed an annual package
of £1.7 million, having presided over a decline in the company’s share price of
90 per cent. You read that right:
ninety, not nineteen.
For so long unwilling to ‘rock the boat’, shareholders
are at last gathering below decks to engage in mutinous talk. Mind you, most crews are still pretty reluctant
mutineers: far from resorting to setting the captain and his officers adrift in
a skiff, most merely hand in petitions pleading for moderation.
How moderation is defined for Bob Diamond, CEO of
Barclays Bank, is a tricky issue. Since Bob
takes home an almost unconscionable £26 million a year, what would represent a
Yes, I know Britain has to pay competitive
salaries to attract talent, but the talent we’ve attracted hasn’t been terribly
impressive – merely terrible.
Time for some of them to walk the plank, I say.